Malaysians invested US$14.05bil abroad last year, almost double the US$8.05bil the country received in foreign direct investment (FDI).
According to the United Nations Conference on Trade and Development’s World Investment Report 2009 (WIR 2009), the outflows from Malaysia surged by 26.8% in 2008 from US$11.08bil the year before.
Malaysia’s FDI outflows have been rising steadily over the last few years, reflecting an increase of 373% from US$2.97bil in 2005. It is the third consecutive year the country’s FDI outflows surpassed inflows.
In 2008, FDI inflows fell by 4% from US$8.4bil in 2007.
National Economic Action Council member Datuk Dr Zainal Aznam Yusof said FDI outflows should not be viewed as totally “negative”.
“The sizeable increase in Malaysia’s outward investment in 2008, as in previous years, is a reflection of Malaysia’s more globalised and integrated position in the world economy,” he said at the launch of the WIR 2009 yesterday.
He said a large part of the outflows was driven by corporate and government-linked companies, such as Sime Darby Bhd, Petroliam Nasional Bhd (Petronas), the CIMB group and Malayan Banking Bhd.
“I will not be surprised if FDI outflows in 2009 are larger than the outflows in 2008 when the WIR 2010 is released next year,” he said, adding that the sizeable increase in outward investments was driven by companies’ cross-border acquisitions.
According to WIR 2009, Malaysia’s FDI inflows and outflows in 2008 had seen “relatively little impact” from the global economic crisis despite a significant effect on FDIs worldwide.
The report ranked Petronas 84th among the world’s top 100 non-financial transnational companies (TNCs) in terms of foreign assets held. Petronas was ranked fifth in terms of foreign assets among the top 100 non-financial TNCs from developing countries.
Other Malaysian non-financial companies that made it to the list were YTL Corp Bhd, Genting Bhd, Sime Darby Bhd, Telekom Malaysia Bhd and Tanjong Plc.
“The inclusion of these six companies clearly reflects Malaysia’s continued capacity to invest abroad through its leading corporations, which is potentially a key component of enhancing its international competitiveness and access to international technology,” Zainal Aznam said.
He also said the FDI in agriculture globally was on the rise despite its limited contribution to total FDIs and it would be a positive potential prospect for Malaysia given its push to re-energise and modernise the agricultural sector in recent years.
Sime Darby’s US$800mil investment in Liberia was noted in the WIR 2009 as an example of major agricultural investments to the developing world. IOI Corp Bhd was also cited in the report as a key agricultural-related TNC in the developing world.
Globally, annual FDI flows to agriculture tripled from 1989-1991 to US$3bil in 2005-2007.
To a question, Zainal Aznam said China and some of the Gulf Cooperation Council countries were very active in investing overseas for food security reasons.
“There was talk of such investment in Malaysia but the idea died. I think it’s worth reviving the idea,” he said.
On the prospects for Malaysia this year, Zainal Aznam said the country’s economy might have touched the bottom although exports were still slow but the country’s financial sector was still very strong and stable.
“I think we will recover, probably in early 2010, but I have to hold back my scepticism for a month or two to see how we fare,” he said, adding that the current economic contraction was “not as severe” as the contraction during the Asian financial crisis 1997/98.
He also urged the country to open up its economy more to attract foreign investment. He said although the Government had announced the liberalisation of some services sub-sectors, there was still room for further liberalisation.
“We have to bite the bullet. We have to open the economy and introduce competition. It may be tough but not impossible,” he added.
On the transformation of the country’s economy, he said the Government was making a good start by engaging a group of experts to develop strategies towards higher growth and income.
“There are lots of things to be fixed. The roof is not leaking; we do not need a plumber. It is the foundation of the house and probably the whole house that need to be rebuilt. The transformation requires concerted efforts,” Zainal Aznam said.
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